CLIENT LOGIN


CAPITAL

CAR® TRUST

INVESTMENTS

Deferring taxes on fees is not just intuitively satisfying, it's also financially smart. Annual taxation imposes a heavy drag on capital accumulation. By eliminating that drag, law firms and their partners can accumulate significantly more capital than if they invest on an after-tax basis.
Chart 1 compares the 10-year growth of a $1 million fee invested on an after-tax basis, with the same fee invested pre-tax, tax-deferred in a CaR® program. Under a CaR® Trust, 100% of the fee is working at all times, free of tax erosion. With more capital at work, not only are the investment profits greater, but the borrowing base is greater as well. Margin loan rates today are as low as 3%, and are expected to remain low for the foreseeable future, making this a highly efficient strategy for funding operations without depleting capital.
BORROWING BASE

TAX-PAID PROFIT
CHART 1
Chart 2 takes a $1 million fee and compares the profits, given a loan-to-investment ratio of 50%, an 8% return, and a borrowing cost of 3%. By placing earned fees in a pre-tax, tax-deferred CaR® Trust, law firms and their partners are free to invest those fees through their own investment advisors. They enjoy greater capital and easy liquidity at low cost. So whatever that capital is to be used for, there is more of it to be used.
Tax Rate Assumptions

Ordinary Income = 45%

Investment Income = 35%
CHART 2